Epic Real Estate Investing - Getting Rich Slowly is the Biggest Scam Ever! | 512

Episode Date: November 2, 2018

Tired of having a 9-to-5 job and saving money? Instead of following a get rich slowly approach, learn how to do it more quickly! Master the definition of "rich," the scam behind the slow path to getting rich, and the 3 steps to getting rich more quickly. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hi, I'm Matt Terrio, and I help busy, unfulfilled professionals build part-time and full-time real estate investing businesses, but not how you might think. You see, people, they come to me, even though they may have a decent, paying, stable job, but if you ask them, they'd say that they're tired of working for someone else. And they're really out of loss as to what they can even do about it. So what they do is they go out and they try all these shiny objects, these get-rich-quick schemes that they see everywhere, and they get frustrated.

by all that and they just kind of come back to their old get rich slowly plan. And what I tell them is that sounds like an even bigger scam if you really look at the facts. Let's do the math. And that's exactly what we're going to do today on today's episode of Financial Freedom Friday. So there are countless get rich quick scams out there that you got to watch out for. And this, what it's done is it's pushed people towards exercising ultimate patience and getting rich slowly. I mean, that's a big trend. That's a thing now. Because get rich quick. That sounds way too good to be true, right? So it must be.

And getting rich slowly sounds too horrible to be false. So it too must be true, right? Well, let's look at it. Oh, and by the way, if you're happy with where you are financially and you like the road that you're traveling, don't listen to me. I got nothing for you here. I don't want to interfere with your satisfaction. I don't want to interfere with your happiness. But if you're failing financially or not succeeding in the way that you like, you need to stay tuned right here.

All righty? So first, let's define rich. And I'm speaking specifically about money. We're not talking philosophically rich. We're talking about money. So what number would have you feeling rich? That's going to be different for everyone. So let's just agree to agree that just for the sake of this video and the interest of efficient communication, we'll say that rich is $1 million.

One million dollars, got it? All right. Now, if you understand that a million dollars, it's not what it used to be. Well, first, you'd be right. And second, it's only going to make what I'm about to show you even more compelling. So for now, we'll just, we'll go with a million dollars. It is what it is. And what that's going to do, what we're going to look at is if we had a million dollars,

what would that give us at a 6% return, right? What could we do with that? If we were going to withdraw, say, 100K a year, we'll do 100K a year. And that's or that equals 8K. a month, all right? And that would actually put us in a 24% tax bracket. And then what we'll do to compensate for inflation will increase the withdrawal by 2% each year. Okay, so we'll do a 2% increase in income. We'll do that annually. All right. So how long would our million dollars last if we did that. How long would it last? Well, it lasts 140 months, just shy of 12 years. Can you see that 12 years?

Yep. And at the end of 12 years, it would be worth zero. It would be all gone. See, a million dollars is not quite what it used to be, right? And 100K a year, that's really not classified as rich either. I mean, you've got to four times that $100,000 just to make it into the 1% club. But let's just keep going. Let's roll with it. So we're comparing apples to apples as much as we possibly can. All right. So what I'm about to show you, it's only going to get worse if your definition of rich is bigger than a million bucks. But the point is going to get made here either way. All right. So we've got a few different ways we can go about making our million. So how are we going to do that? So one way is we could save our way. We could save our way to a million bucks.

And let's say we saved $1,000 a month. How many months? And we'll keep it nice and safe. We're going to keep it under the mattress. And so how long would it take for us to save that $1 million a thousand dollars a month? It's going to take 83 years. It's a long time, right? So I guess if that's the way you're going to go about it, if you haven't started saving,

you better get started, right? But you wouldn't do that, right? No, we wouldn't do that. That'd be silly. We want to take advantage of all that compound interest thing, that compound interest thing that the financial planners are always talking about. I mean, after all, they call it the eighth wonder of the world, right? So let's say you found a really good safe mutual fund.

I'll just abbreviate here. Mutual fund. Okay, and we found a nice safe one that's going to average a 6% return. It's going to average 6%. As long as you're invested in that, it'll average 6%. And the average annual return of a mutual fund over the last 20 years, by the way, it's just shy of 5%. If you don't believe me, Google it. I'm going to be really optimistic though, and I'm going to give you an extra point here for this example.

So at 6%, how long will it take to get to your $1 million? Okay. It's going to take 30 years. 30 years. It's better than the 83 years, right? That's for sure. But again, you should probably get started right away if you haven't already. Oh, but don't get too excited here. Yet if you find this 30 years acceptable, mutual funds, they've got fees. So let's say you found a really good mutual fund. You got one at 6%. Let's say it's got a 1% fee annually. All right, 1% annually. That would bring your balance down to $808,000, right?

That 1% fee reduces it to 808K. That 1% fee costs you $200,000. It's amazing, right? It's going to cost you $200,000 over that period because that compound interest thing that your financial planner told you about, it works both ways. Those fees, they compound too.

all right so you're gonna have to work an extra five years or so to make that up just to reach your one million dollar goal and then you better not live longer than the 12 years because that one that one million dollars that's gonna be gone and then what are you going to do all right let's try something else let's go really really crazy let's go really really crazy let's say you found an investment that that doubled every year let's see I just investment it's going to double every every year every year year. Can you see that? Investment doubles every year. Okay, good. And then, I mean, that's compounding for sure. And let's say there are zero fees, okay, zero fees. And the barrier to entry for this investment? Super simple, really low, really easy. Anyone can do this. You only

need $1. You only need $1 to get in there. And that's going to double every year. We can all that, right? Of course we can. And if it doubled every year, how long would it take you to get to your $100, excuse me, your $1 million? That's going to take 20 years getting a little better. But that's an exceptional investment. All right? I don't know where you find that, but I'm just going to give that to you. Sound good? Yeah, it does, doesn't it? You'd sign up for that. Of course. I would too. That's a really good investment doubles every year. But wait, what are the tax implications on something like this? you know, just like your investment, just like the fees, taxes, they compound two. That eighth wonder of the world is not sounding so fantastic anymore, is it?

So at 13%, let me see if I find a different color here. Taxes, I guess we should put that in red. So if this was taxed 13% annually, just a 13% tax bracket, I live in California. That's just my state tax. That 20 years, it takes your million dollars. all the way down to 250,000 bucks. It kills three-fourths of it. And then if you had the federal tax, the 28%,

that would take your million bucks all the way down to 51,000. Incredible, right? And if you went to 39%, that's gonna be something very, very low. All right, so we can keep on going. I'm not gonna factor in inflation. I mean, how low can we go?

already at zero. So here are the things that I want you to look at. First, it's almost impossible for the average person to save their way to riches. The math just doesn't work. And the average person just can't put enough away. The average person can't put $1,000 away a month. Second, if the average person were able to put enough away, it's going to take great sacrifice. And third, for those that actually do make it, the best years of their lives are behind them. and there right there, there lies the Get Rich slowly scam that no one is telling you about. You're not going to get rich. You're going to make huge sacrifices along the way trying to make it work.

And you're going to waste at least half of your life before you realize you're out of time. So, I don't know, if you look at that. Is that all that different than the typical Get Rich quick scam? Pretty much the same result, right? Here's the deal. We each only have four to five decades to make. make this work. We got four to five good decades of working capacity. So I'd ask you, which decade are you in right now? How many more do you have left? What can you do to actually

get rich? And do it while you're still young enough to enjoy it. All right, I'm going to give you three steps. Okay. So this is three steps to get rich. At the very least, it's a really strong starting point, okay? So number one, number one, getting rich is going to take some sacrifice. I didn't say this is going to be easy. There's no way around that. It's going to take some sacrifice. But rather than making the sacrifice to save a nickel, as people like Dave Ramsey and Susie Ormond will advise you to do, make the sacrifice to earn a buck instead. Because if the sacrifice is inevitable, whether you choose a fast or slow method, get out of the save of a nickel mode and shift into earn a buck mode okay earn a buck mode so that's number one number two shift your focus now from

investing to save money to investing to create income here's what i mean focus on the on the eight thousand dollars a month you're going to live on as opposed to the one million dollars you need to save to create it which is only going to last you 12 years anyway so that's the second thing, invest for income. All right. Third one. Now it's time to just choose your investment vehicle and go. And based on what we've been talking about, we need something that generates income. We need something that calculates the ROI post fees. And the third thing, it grows in a tax-sheltered environment. And that would be, you guessed it. Income. real estate.

So follow these three steps, and most people can accomplish in four years what 95% of the population is unable to do in 40 years. I mean, it's still four years, so it's not necessarily get rich quick, but certainly it's get rich quicker and getting rich permanently. And if you'd like some help, we can show you how to do it at r-e-I-A-Ase.com, or we can just do it for you at cashflow savvy.com. Matt Terrio, and I'll see you next week on another episode of Financial Freedom Friday. This podcast is a part of the C-suite Radio Network. For more top business podcasts,

visit c-sweetradio.com.